Six Flags Bankruptcy May Take 4-6 Months, CFO Says

Six Flags’s Chapter 11 reorganization may take 4 to 7 months to complete, the amusement-park chain’s CFO said. “Our hope is that, & we believe it’s feasible, we’d be done with the process before the end of the calendar year,” Jeff Speed said, citing advice from the company’s legal & financial advisers. The NY-based owner of 20 theme parks filed a petition in U.S. Bankruptcy Court in Wilmington, DE, on June 13, listing assets of $3B & debt of $2.4B as of Dec. 31. Six Flags is seeking court approval of a prearranged reorg plan to cut its debt by about $1.8B & to eliminate over $300M in preferred stock obligations, it said. Emerging from bankruptcy before the end of ‘09 is an “aggressive” estimate, said Joseph Stauff, analyst at CRT Capital Group in Stamford. “Given the probability this can be a contentious battle, that always alludes to much longer-than-expected bankruptcy period,” he said. “The issue is they have to prove to the bankruptcy court that the plan currently contemplated is fair. ”Under the proposed plan, senior secured lenders would receive 90% of the stock in the reorg company, while unsecured bondholders would get 10%, CreditSights analysts Chris Snow & Frank Lee said. Six Flags offered unsecured bondholders 85% in a recent debt-for-equity exchange, they said. “Unsecured bondholders will likely be displeased with the current terms being considered,” the analysts wrote. Shareholders will likely receive nothing, Fitch Ratings analyst Mike Simonton said. “In bankruptcy, the prior equity typically gets canceled,” he said. “It gets zero value.” Six Flags’s largest shareholders include Chairman Dan Snyder, owner of the National Football League’s Washington Redskins. He owned 5.4% of Six Flags, or 5.28M shares, as of Oct. 2007, according to Bloomberg data compiled . Snyder won a proxy fight in late 2005, ousted then-CEO Kieran Burke & appointed himself now-CEO Mark Shapiro & Dir. Dwight Schar to the board. Under Shapiro,it has sought to clean up the parks & add family-focused attractions, like Thomas the Tank Engine & Looney Tunes. “Mark Shapiro & his team exceeded every operational goal we set out 3 years ago & Six Flags is on the path to maintaining its growth & continuing to satisfy millions of guests,” Snyder said in an e-maile. “The harsh realities of today’s credit markets, & the onerous debt we inherited from previous management, brought us to this place, but I’m confident Six Flags will emerge as a stronger corp.” It plans to increase adv to reassure visitors Six Flags parks are open for business, CFO he said. Park-goers won’t notice a difference in services & product offerings, he said. Six Flags shares dove 98% of their value since Nov. 22, ‘05, when Snyder won the proxy fight. Six Flags was delisted from the NYSE in April. Shares fell 9¢, or 36%, to 17¢ in over-the-counter 21.3M shares trading on volume, more than 8x the stock’s 3-month daily average.